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The German DAX struggled to break back inside the ascending channel starting Sep ’11. In fact, the breakout from the regression line back in February was huge. The index lost nearly 50% of its value within a period of three weeks; from the 14000 region down to a 7-year low of 8000.

Despite bulls having made a meaningful attempt and recovered over 50% of the decline, the rejection above the 11,000 region suggests this is just a retest.

That said, and after two failed attempts at the channel-TR1 confluence area, the DAX could slide lower based on price action and on the RSI (9) divergence.

The medium-term ascending channel below shows prices trading at the regression line. A break could take the index below the 10000 figure, near the 50% retracement. There, additional clues will be received.

german dax

The levels at which short-term pullbacks can be expected are featured as support TS1, TS2, the lower channel, and the recent low of 10165.

With the RSI (9) validating the bearish divergence in...


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